Finance Act 2008

Industrial and agricultural buildings allowances

84 Abolition of allowances from 2011

(1) Parts 3 and 4 of CAA 2001 (industrial buildings allowances and agricultural buildings allowances) do not apply in relation to expenditure incurred on or after the relevant date.

(2) Omit those Parts of that Act.

(3) The amendment made by subsection (2) has effect in relation to chargeable periods beginning on or after the relevant date.

(4) The relevant date is—

(a) for corporation tax purposes, 1 April 2011, and

(b) for income tax purposes, 6 April 2011.

(5) Schedule 27 contains amendments and savings related to this section.

85 Phasing out of allowances before abolition

(1) For a chargeable period to which this section applies (“a transitional chargeable period”), a person’s entitlement to a writing-down allowance under Part 3 or 4 of CAA 2001 in respect of qualifying expenditure is to be determined in accordance with this section.

(2) This section does not apply to a writing-down allowance in respect of qualifying enterprise zone expenditure.

(3) If the whole of a transitional chargeable period falls within a financial year listed in column 1 of the table (for corporation tax purposes) or a tax year listed in column 2 of the table (for income tax purposes), the writing-down allowance to which the person is entitled for that chargeable period is—

WDA × P

where—

• WDA is the writing-down allowance to which the person would be entitled for the chargeable period apart from this section, and

• P is the percentage specified in relation to that year in column 3 of the table.

(4) If subsection (3) does not apply in relation to a transitional chargeable period, the writing-down allowance to which the person is entitled for that chargeable period is to be determined by—

(a) calculating the apportioned writing-down allowance for each financial year (for corporation tax purposes) or tax year (for income tax purposes) in which part of the chargeable period falls, and

(b) adding the amounts of the apportioned writing-down allowance for each of those years.

(5) For the purposes of Part 3 of CAA 2001 (industrial buildings), the apportioned writing-down allowance for a financial year or tax year in which part of a transitional chargeable period falls is—

where—

• DCPY is the number of days in the chargeable period which fall in that year,

• DCP is the number of days in the chargeable period,

• WDA is the writing-down allowance to which the person would be entitled for the chargeable period apart from this section, and

• P is the percentage specified in relation to that year in column 3 of the table.

(6) For the purposes of Part 4 of CAA 2001 (agricultural buildings), the apportioned writing-down allowance for a financial year or tax year in which part of a transitional chargeable period falls is—

where—

• RDCPY is the number of relevant days in the chargeable period which fall in that year,

• RDCP is the number of relevant days in the chargeable period,

• WDA is the writing-down allowance to which the person would be entitled for the chargeable period apart from this section, and

• P is the percentage specified in relation to that year in column 3 of the table.

(7) The relevant days in the chargeable period are the days in that period for which the person was entitled to the relevant interest in relation to the qualifying expenditure (within the meaning of Part 4 of CAA 2001).

(8) For the purposes of CAA 2001, the residue of the qualifying expenditure at any time is to be calculated as if the writing-down allowance made to a person under Part 3 or 4 of that Act in respect of the qualifying expenditure for any transitional chargeable period were the writing-down allowance which would have been made apart from this section.

(9) This section applies—

(a) for corporation tax purposes, to chargeable periods which begin before the relevant date and end on or after 1 April 2008, and

(b) for income tax purposes, to chargeable periods which begin before the relevant date and end on or after 6 April 2008.

(10) In this section references to the table are to the following table—

Column 1	Column 2	Column 3
Financial year beginning 1 April 2007 and earlier financial years	Tax year 2007-08 and earlier tax years	100%
Financial year beginning 1 April 2008	Tax year 2008-09	75%
Financial year beginning 1 April 2009	Tax year 2009-10	50%
Financial year beginning 1 April 2010	Tax year 2010-11	25%
Financial year beginning 1 April 2011 and later financial years	Tax year 2011-12 and later tax years	0%.

(11) In this section—

• “the relevant date” has the same meaning as in section 84, and

• “qualifying expenditure”, in relation to a writing-down allowance under Part 3 or 4 of CAA 2001, means the qualifying expenditure in respect of which the allowance is made.

86 Qualifying enterprise zone expenditure: transitional provision

(1) For a chargeable period which begins before, and ends on or after, the relevant date, a person’s entitlement to a writing-down allowance under Part 3 of CAA 2001 in respect of qualifying enterprise zone expenditure is to be determined in accordance with subsection (2).

(2) The writing-down allowance to which the person is entitled is—

where—

• DCPB is the number of days in the chargeable period which fall before the relevant date,

• DCP is the number of days in the chargeable period, and

• WDA is the writing-down allowance to which the person would be entitled for the chargeable period apart from this section.

(3) In this section “the relevant date” has the same meaning as in section 84.

87 Phasing out of industrial buildings allowance: anti-avoidance

(1) In CAA 2001, after section 313 insert—

“313A Calculation of allowance after sale of relevant interest: anti-avoidance

(1) This section applies where—

(a) there is a sale of the relevant interest in the building which is a balancing event to which section 314 applies,

(b) the buyer and seller have different chargeable periods,

(c) the control test (within the meaning of section 567) is met, and

(d) the purpose, or one of the main purposes, of the sale is the obtaining of a tax advantage by the buyer under this Part.

(2) The writing-down allowance to which the buyer is entitled for the chargeable period in which the sale takes place is—

where—

• DI is the number of days in the chargeable period for which the buyer is entitled to the relevant interest,

• CP is the number of days in the chargeable period, and

• WDA is the writing-down allowance to which the buyer would be entitled apart from this section.”

(2) The amendment made by subsection (1) has effect in relation to the sale of a relevant interest on or after 12 March 2008, except for such a sale in pursuance of a relevant pre-commencement contract (and for this purpose “sale” has the same meaning as for the purposes of Part 3 of CAA 2001).

(3) A contract is a relevant pre-commencement contract if—

(a) the contract is a contract in writing made before 12 March 2008,

(b) the contract is unconditional or its conditions have been satisfied before that date,

(c) no terms remain to be agreed on or after that date, and

(d) the contract is not varied in a significant way on or after that date.